Port strikes could sink access to foreign markets

A potential strike at U.S. East Coast ports could have far-reaching effects on American farmers, ranchers, and consumers, warns the American Farm Bureau Federation’s economist Daniel Munch. If the International Longshoremen’s Association and the United States Maritime Alliance fail to reach an agreement by the end of September, significant disruptions are likely to occur, with consequences rippling across the agricultural sector.

The ILA, North America’s largest maritime workers’ union, represents 85,000 longshoremen who load and unload cargo at ports along the Atlantic, Gulf coasts, Great Lakes, Puerto Rico, and the Bahamas. The USMX, on the other hand, represents about 40 ocean carriers and terminal operators that employ these workers. At the core of this looming strike are wage disputes, with the ILA pushing for higher wages, improved health benefits, and protection against job losses from automation. A breakdown in negotiations would heavily impact food and agricultural products, which rely on these ports to reach international markets.

What’s at stake for agriculture exports and imports

In 2023 alone, U.S. agricultural exports totaled over 143 million metric tons through ocean ports, representing more than $122 billion in value. This includes over 70 percent of the nation’s total agricultural export value. On the import side, 39.4 million metric tons of agricultural products worth $110 billion came through U.S. ports. With such massive figures, it’s clear that disruptions to the flow of goods in and out of the country could be catastrophic for farmers, ranchers, and the broader economy.

One of the most vulnerable sectors in this strike would be containerized agricultural exports, which make up just over 30 percent of all U.S. agricultural exports. The East Coast ports, in particular, handle about 46 percent of these exports, putting around 14 percent of total agricultural exports at risk if the ILA strike materializes. Over a single week, this disruption could lead to losses of over $318 million for containerized agricultural exports alone.

Imports would also be affected, with containerized goods making up 73 percent of all waterborne agricultural imports. East Coast ports handle a significant portion of these imports, representing 72 percent of all U.S. containerized agricultural imports. Major hubs such as New York, Philadelphia, and Houston would feel the brunt of the strike, putting an estimated $1.1 billion worth of agricultural imports at risk weekly.

Commodities in jeopardy

Certain agricultural products would be more severely impacted than others. For instance, soybean exports, particularly through East Coast ports, face a unique challenge. In 2023, about 6 percent of U.S. soybean exports were containerized, amounting to 2.67 million metric tons. A disruption in export flow would exacerbate storage shortages and drive down prices for soybeans, especially as producers are set to harvest a record crop this year.

Poultry exports are even more at risk, with 80 percent of all waterborne poultry exports relying on East Coast ports. A disruption here would not only affect poultry producers but also upstream suppliers of corn and soymeal, essential feed ingredients for broiler operations. The port of Savannah, responsible for nearly 50 percent of East Coast poultry exports, would be particularly affected.

Other commodities, such as cotton, hay, red meat, vegetables, and dairy products, would also be at risk, with the total weekly value of containerized agricultural products passing through these ports exceeding $1.4 billion.

Global supply chain impacts

The effects of a port strike would not be confined to the U.S. alone. Key trading partners such as China, Indonesia, and Vietnam, which receive millions of metric tons of U.S. agricultural goods annually, could see a disruption in supply. Additionally, Puerto Rico, which relies on U.S. mainland shipments for over 85 percent of its food supply, would face critical shortages if the strike persists.

Beyond agricultural producers, U.S. consumers would also feel the pinch. Vital goods like bananas, canned foodstuffs, and beverages such as beer, wine, and spirits all flow through East and Gulf Coast ports. Delays and shortages would not only lead to higher prices but could also affect the availability of everyday items, from fresh fruit to chocolate.

One potential solution is redirecting exports to West Coast ports, where agricultural exports have seen a significant uptick in activity. For instance, exports from Los Angeles increased by 28 percent between May and June 2023, while those from Seattle rose by 26 percent. However, the ability to shift exports is limited by infrastructure and transportation logistics, especially for producers far from these ports.

With over $1.4 billion in agricultural goods passing through East and Gulf Coast ports weekly, a strike would create severe backlogs, cutting off vital market access for farmers and driving down prices for key commodities like poultry, soybeans, and specialty crops. Although rerouting goods through West Coast ports may offer some relief, the agricultural sector remains in a precarious position, facing rising operational costs, supply chain shifts, and potential oversupply.

In the event of a strike, both producers and consumers would suffer. American farmers, already facing tight margins, could see profitability erode further, while consumers may have to cope with higher prices and limited availability of everyday goods. The agricultural sector can only hope for a resolution before the September 30 deadline, as further delays could trigger widespread disruptions.